Study: Wage theft rampant in Chicago car washes

University of Illinois researchers say wage-and-hour violations are the rule, not the exception.

September 20, 2012

It’s no secret these days that some Chicago employers pay workers less than what the law requires. It’s a practice known as wage theft. A University of Illinois study, released Thursday, suggests that wage theft in one Chicago industry goes beyond a few rogue employers. We report from our West Side bureau.

MITCHELL: Researchers at the university’s School of Labor and Employment Relations designed a survey that reached employees of 57 Chicago car washes. The researchers expected to turn up some wage-and-hour violations. But Alison Dickson Quesada — she designed the survey — she says the car wash wage theft was more widespread than she had ever imagined.

DICKSON QUESADA: Of the 204 workers we surveyed, over three-quarters suffered violations of minimum-wage laws.

MITCHELL: The Illinois minimum is $8.25 an hour.

DICKSON QUESADA: The average hourly wage was just about $6.50.

MITCHELL: That’s $1.75 short. And Dickson Quesada says, while most of those surveyed had worked more than 40 hours in the previous week, . . .

DICKSON QUESADA: 98 percent of them were not paid [the] legal overtime rate.

MITCHELL: That’s time-and-a-half.

DICKSON QUESADA: Extrapolated over a year, workers were losing about $4,400 to wage theft.

DICKSON QUESADA: We even found one car wash where workers were required to pay $12 a day just for the privilege of working at that car wash.

MITCHELL: The research owes partly to a grant from the United Steelworkers. That’s a union. It has organized some car wash workers in Los Angeles. And some of the survey interviewers have ties to a Chicago labor-rights group. But Dickson Quesada says she and her university colleagues designed the study, trained and supervised the interviewers, and analyzed the data. And she stands behind the main finding: In Chicago car washes, wage theft is the rule, not the exception.

DICKSON QUESADA: These are not just a few bad apples.

PECORA: To paint this as the norm is absolutely ridiculous.

MITCHELL: Robert Pecora heads the Chicagoland Carwash Association. He also owns a company that distributes car washing chemicals.

PECORA: I’ve been in this industry for over 20 years and I’ve got contact with hundreds of business owners and I’ve personally never seen or [had] any knowledge of any of these things that are written in the report.

MITCHELL: Pecora says his association trains its members to treat employees ethically. He says any car wash that doesn’t follow wage-and-hour laws should have to face government regulators.

PECORA: If there is a complaint, they should look into it.

MITCHELL: But here’s the thing. Filing a complaint means bringing in the authorities, and that’s the last thing many car wash workers want to do. The study says most are immigrants who speak little English and don’t have much formal education. A lot of them also lack stable home addresses and basic resources such as telephone numbers and email accounts, so it can be hard for regulators to reach them and keep contact. Many car wash workers also lack papers to live in the United States.

WORKER: Tienen miedo de hablar. . . .

MITCHELL: This guy works at a Northwest Side car wash. He asked us not to use his name. He doesn’t want trouble with his boss or immigration authorities. He says he has been working in Chicago car washes since 1994. And he says he has had to put up with theft of everything from overtime pay to tips. The worker says not many car wash employees are willing to file complaints about wage theft because they’re afraid they’ll get fired or deported.

MITCHELL: Despite all his years in the car wash industry, this worker earns so little that he can afford only a one-bedroom apartment. And he shares it with his wife and two sons.

SOUND: Car wash sprayer.

MITCHELL (ON LOCATION): I’m at a car wash in Chicago’s Lincoln Park neighborhood. A half-dozen workers — all but one are Latino immigrants — they’re scrubbing one late-model SUV after another. This car wash is called We’ll Clean. Unlike some of its competitors, We’ll Clean pays its employees the Illinois minimum wage or even a bit more. But, on separate occasions years ago, the U.S. Department of Labor cited the owner for overtime violations. The feds ordered tens of thousands of dollars in back pay to workers.

MITCHELL: The owner’s name is David Launius. He declines to answer questions about those overtime cases on tape. He says he made good with the workers and cleaned up his act years ago. But this year the feds came around again and found more overtime violations. The Department of Labor says it has ordered another $6,000 in back wages and fined him almost $1,000. Launius insists the case stems from lies reported by his employees. And he says there is only so much he can do to lift their living standards.

LAUNIUS: What makes it so difficult to pay $14 or $15 or $16 an hour? Well, we’d have to raise the price of our service.

MITCHELL: Launius says he can charge only so much for his type of car wash.

JULKA: Under the current minimum-wage law, there is no penalty for the employer failing to keep accurate records. Some employers do not keep any time and payroll records. And this lack of record-keeping creates a problem for enforcement efforts in low-wage industries.

MITCHELL: Still, Julka says, the state of Illinois is trying to step up its car wash enforcement. In the last five years, she says, her department has finished 14 investigations of car washes. Julka says those cases have led to almost $38,000 in back payments. The U.S. Department of Labor says it’s stepping up enforcement too. The DOL says since 2010 it has ordered almost $128,000 in back pay from eight Chicago-area car washes. The feds say they’re also going through labor advocates to encourage workers to file complaints. Julka says the state is too.

MITCHELL: Those organizations include Arise. That’s a North Side group that came up with the idea of surveying the car wash workers. Arise organizer Micah Uetricht says the collaboration has helped regulators crack down on some wage-and-hour violators, but . . .

UETRICHT: . . . long term, we know that the only way that any group of workers can lift their standards of living is through unionization and through organizing.

MITCHELL: Workers at some car washes in Los Angeles and New York City have managed to unionize. Uetricht says no union has devoted resources to organizing Chicago car wash workers yet. Until one does, he says, the workers shouldn’t have to put up with wage theft.